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Trump blinks when trade war threatens consumers

President Trump Donald John TrumpSecurity analysts call Trump's language on Hong Kong protesters "inappropriate" Americans' views on China hit record low: survey Pentagon watchdog says it officially reviews billions of "war clouds" contract MORE to protect American consumers from the next round of his trade war with China amid growing threats to the economy and his re-election.

The White House said it would delay ten percent tariffs to come into effect on September 1

for certain consumer goods from China while excluding other products – less than two weeks after Trump announced the new import duties.

Exposing customs duties until December 15 is expected to temporarily cool US trade tensions with China while protecting consumers and US companies from higher costs. The financial markets also kept up with the news after weeks of anxiety for a global downturn.

However, reducing the scale and delaying the effects of the trade war suggests declining odds for a broader agreement with China.

Trump insisted on Tuesday that he retains the upper hand in his fight with China, claiming that Chinese President Xi Jinping is keen to make an agreement. Despite this, Trump admitted that he decided to stick to additional tariffs because of the potential harm to consumers.

"We do this during the Christmas season, just because some of the tariffs would affect American customers," Trump said.

Trump has already introduced a $ 25 billion duty on $ 250 billion in Chinese imports and will charge about $ 300 billion more at a ten percent tariff beginning in mid-December.

The new tariff would cover and likely raise the prices of hundreds of food and agricultural products, clothing, footwear, household appliances and a host of other important consumer goods manufactured in a few places, if any, outside China.

These products include mobile phones, laptops, video game consoles, toys and certain shoes and clothes.

Trump has long denied that American consumers would cover the cost of customs duties, which are taxes paid by US importers of Chinese goods. The President has argued that China has effectively put forward the bill on its own products as its economy slows and the value of its currency declines.

But Trump's decision to delay additional tariffs until after most of the holiday trade season reflects mounting fears that the Trade War could derail the robust US economy in the coming months.

Economists at Bank of America, Goldman Sachs and Moody's Analytics warned ahead of Tuesday's announcement that the odds of a recession between now and the 2020 election are rising, depending on part of Trump's trade policy.

A slowdown would be a deterrent to any incumbent president, and Trump has linked his reelection to the bid largely to the health of the economy.

Whether growth stagnates largely depends on the strength of consumer spending, the power behind about 70 percent of the country's gross domestic product (GDP) growth.

Uncertainty fueled by Trump's trade war and other economic headwinds has dampened US business investment, which fell by 0.6 percent in the second quarter of 2019. But a stunning 4.3 percent increase in consumer spending helped GDP grow at a steady rate of 2 , 1 percent per year over the same three-month period.

Retailers had warned Trump that the new tariffs could force layoffs, store closures and price increases on the way into the holiday shopping season.

"I am sure that the feedback they have received is concern about the economy and how it is primarily supported right now by the consumer," said Stephen Myrow, Head of Beacon Policy Advisors in Washington. "You don't really want to do anything that will undermine it."

The trade associations of retailers and manufacturers offered limited praise for the tariff delay while expressing deep concern about what might come next.

The White House plans to exempt certain items from the new China Customs, but almost all goods imported by the United States from China will still be taxable.

"We urge the administration to develop an effective strategy to deal with China's unfair trade practices by working with our allies rather than using one-sided tariffs that cost US jobs and harm consumers," said David French, senior vice president for government relations at National Retail Federation, in a statement.

The delay also offers little more than a hole for peasants who have suffered billions in lost sales to China since the trade war began in July 2018.

It is unclear if or when China will resume buying US crops and live stock, despite intense pressure from Trump to do so. Xi is closely scrutinized for China's handling of protocols protests in Hong Kong that Beijing has stuck to Trump, further complicating the path to a comprehensive trade agreement.

"He can in no way be seen as any weakness against the United States," Myrow said of Xi. "A lot of goodwill has gone between Trump and Xi, so I think that's because I think it's a pretty unmatched situation while they're both responsible."

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